Comeback of the Failed Entrepreneur: An Integrated View of Costs, Learning, and Residual Resources Associated with Entrepreneurial Failure

Abstract

Although failure can be financially, socially, and psychologically costly, it can promote future entrepreneurial success. This study investigated how failure can be utilized as a springboard for new ventures by considering the cost recognition, learning ability, and resources of entrepreneurs within a social environment. Failure costs, learning outcomes, and residual resources following business failure and how they influence the intention to undertake subsequent entrepreneurial endeavors were considered. With the motivation–opportunity–ability (MOA) framework as a theoretical foundation, we quantitatively analyzed the sample, which comprised 216 entrepreneurs who had experienced business failure. Perceived residual resources were a major factor affecting an entrepreneur’s decision-making in subsequent ventures, even when the entrepreneur had learned from failure and overcome the associated costs. Additionally, the psychological costs incurred exhibited a nonsignificant effect on learning from failure. Based on the MOA framework, failure costs can be regarded as learning opportunities for an entrepreneur as well as drivers promoting the intention to resume business. Such intentions are mediated by the learning ability of entrepreneurs and moderated by motivation in terms of residual resources. This study provides a holistic view re-examining the mechanisms of frustrated entrepreneurs to identify opportunities and evaluate resources.